First Person: Living Without Credit Cards is Saving Me $414 a Year

Yahoo Contributor Network

For years I relied on my credit card to cover the gaping holes between my income and my spending. Now, after paying my balance in full and putting the card away, I'm adjusting to a life without credit cards. While it hasn't been easy to adapt, I am enjoying the money I am saving along the way. Here are three ways living credit card free is going to save me money.

Not facing new costly credit card processing fees.

According to CNN Money, on Sunday, January 27, many stores across the U.S. started charging a "checkout" fee on all credit card purchases. The article, which is published on Yahoo! Finance goes on to say retailers can charge a fee of anywhere from 1.5% up to 3% of a total purchase on any credit card transaction. At the highest rate, a retailer could charge as much as $3 for every $100 spent, which doesn't seem like much at first, but it will quickly add up.

Not long ago I was using a credit card to buy our monthly groceries, which means I was spending around $250 a month. At $250 a month I would be spending $7.50 a month in "checkout" fees, or around $90 a year. That's a lot of money to pay just to spend my own money.

Not paying high interest charges.

My credit card has always had a high interest rate. When I first received the card the rate was at 19%, but that rate shot up over 22% during the recession in 2008. When my husband and I made the decision to pay my balance in full I owed around $2,300 on my credit card, and had minimum monthly payments of $35 a month (most of which was going toward interest charges). If I would have continued to make my monthly payments it would have taken me seven years and another $2,300 to pay the card in full. In the end, I'll save around $27 a month ($324 a year) in interest charges by keeping a zero balance on my credit card.

Not spending money I don't have to spend.

I think of myself as a very responsible person, especially where our finances are concerned; however, even I fall victim to overspending from time to time. My overspending was at its worst when I was carrying my credit card because I knew I could by now and pay later. Removing that temptation has saved me untold amounts of money over the past 12 months, and will continue to save money in the future.

Eliminating my credit card use is saving no less than $414 a year. While I have to admit that I was nervous about going credit card free, now that I've seen how much money I'm saving without it, I'm glad I ditched it.

*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.

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